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> They have ultimate power over everything. They could ban my favourite subreddit tomorrow if they wanted. No well-functioning board would act like that. Sure,
by tomhoward 6y ago
> They have ultimate power over everything. They could ban my favourite subreddit tomorrow if they wanted.
No well-functioning board would act like that. Sure, they can pressure the CEO to take particular action when the company is under pressure, but normally, that kind of micromanaging by the board would be a sign of serious dysfunction.
They are there to represent the shareholders, appoint the executives, and to ensure the company is being managed well, including complying with laws and adhering to relevant societal expectations.
- markdown 6y agoThe question was about what power the board has, not how a well-functioning board should operate.
- tomhoward 6y agoSure, technically, perhaps, but also not really? Their fiduciary duty is to act in the company's best interests, so they can't do anything that a court could find was harmful to the company, or to shareholders, including minority shareholders. So, much like in a healthy governmental system, there's a tension of power; between the board, management, shareholders, customers, the general public, and the law. So it's not really "ultimate" power. Yes "ultimate" in terms of appointing executives and setting long-term company direction. But not "ultimate" in terms of being able to, say, arbitrarily shut down a subreddit; if management didn't agree and it was not clearly in the company's best interests, it could lead to a leadership crisis and/or a fiduciary breach. Note the questioner specified: "In terms of day to day operations...". The point is that the board is expressly not meant to interfere in day-to-day operations.